Landsvirkjun

Moody‘s changes Landsvirkjun´s outlook from stable to positive

5. May 2015

Moody‘s credit rating agency has changed Landsvirkjun‘s outlook from stable to positive. According to Moody´s the change of outlook to positive acknowledges the progress Landsvirkjun has made with regard to improving its business fundamentals and strengthening its financial
profile.

Positive factors that influence Moody’s rating opinion are: Strong position in the Icelandic energy market, low cost renewable generation asset base and stable cash flows. However, the company’s assessment is constrained by: High leverage, customer concentration, exposure to aluminium price, foreign exchange risk and the proportion of outstanding debt linked to floating interest rates.

Moody’s recognizes that Landsvirkjun’s financial profile has steadily improved and that important progress has been made in reducing market risk. In particular, aluminium price risk has been reduced by renegotiation of the long term contract with Rio Tinto Alcan, by consistent hedging activities and new power contracts. Moody’s also mentions positive progress that has led to reduced foreign exchange- and interest rate risk in Landsvirkjun’s debt portfolio.

Mr. Hördur Arnarson, CEO:
“This is good news for Landsvirkjun and an important step to improve the company’s access to international capital markets. This change follows positive development in the operations of the company and increased financial strength in the recent years. The company expects this development will continue in the years to come”.

Landsvirkjun - PR 4 May 2015.pdf

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